New Theory Suggests Poor Should Marry Rich to End Income Inequality
This week focused on the issue of equal pay for women. In spite of great strides in breaking, or at lease severely cracking, the glass ceiling, the wage gap for women remains and appears to be getting wider. Women make up more than half the work force and, since the recession, a greater number of women are the primary, if not sole, breadwinner. With inherent structural traditions that continue to pay women less, changes in family dynamics also affect the economy as a whole. This coincides with the most extreme levels of income and wealth inequality worldwide in recent history.
There are several factors that contribute to income inequality. Deregulation, politics and an uneven distribution of the progress made over the past 40 years are just some of the conditions that have made the chasm between the very rich and everyone else seemingly insurmountable. Recently a group of researchers have posited another theory to explain the huge disparity and why it may be impossible to reverse.
A working paper titled Marry Your Like: Assortative Mating and Income Inequality presented to the National Bureau of Economic Research puts forth the idea that the rise of assortative mating, which refers to the tendency of similar people marrying each other, is a factor – possibly a key factor – in the rise of inequality. The group of researchers, which hail from the United States, Spain and Germany, set out to explore if there has been a rise in assortative mating since 1960 and if their theory was correct. As they await peer review of their data and methods, they have published their preliminary findings with some interesting conclusions.
While many women did go to college and have careers in the 1960s, most wage earners were men and were the sole provider for the family. Since fewer women worked overall, women and men were more likely to find their future spouse in their social circles rather than their job. This meant church or school (more likely high school than college) would be the place where life mates were found. There was also a better chance of women marrying men from different socioeconomic classes as the lines were generally more blurred.
Sometimes, the prince married Cinderella.
Over the next several decades, a greater number of women were getting higher degrees and more fields opened up for them. This also opened up the circles in which men and women met. Men were meeting more women with college and post-college degrees. According to the assortatative dating theory, these people would more likely choose to date each other, rather than someone who was less educated. The researchers conclude that this is indeed the case.
To test their theory, they explored the affects of random matching. They looked at the census data of select years from 1960 to 2005. In 1960, there was more variance in the education levels between husband and wife. Over time, a greater percentage of couples had identical levels of education. They did an experiment in which they randomly matched the data to see if the results would change. Surprisingly, there was little variance in the results when matched randomly in 1960. However, in 2005, the number of couples with identical education levels changed dramatically, meaning that it would have been much lower if the matching was random rather than by choice.
Traditionally, higher education levels lead to higher wages. It doesn’t take a degree in economics to realize that if two people with higher incomes combine their assets, a higher household income occurs. The researchers conclude that because of the increase of women’s earning power, the coupling of men and women of similar education and economic backgrounds is not a random occurrence.
This is why extreme income inequality is here to stay, according to them.
Their analysis shows the difference in household income when combining different education levels. In all cases, the higher the education level, the higher the education. When spouses had different levels of education (i.e. one post-college and the other high school), the effect on household income was much smaller in 1960. However, even when both spouses had higher levels of education, the increase in household income was half of what the effect is today.
The income gap between the top and everyone else was much more gradual and smaller than 1960. Plus there was a much larger middle class, attributable to the post war economy and government policies that promoted equal access. Today, incomes are much more polarized. So while the idea of assortative mating is not that surprising, the researchers believe the effects can be much more extreme since the difference between wages of top earners and those further down the economic scale are so disparate.
All because women are making more money.
The paper ignores the other issues leading to income inequality, such as the lower wages and lack of access for people, especially those of color. It doesn’t look into the wage gap that pays women less and that the lower wage jobs are dominated by women. The study also looks at data pre-recession, so it does not take into account the changing economic landscape where things like a higher education mean less today. It also doesn’t look into the policies that favor the top one percent and have created the situation today where only a few people control the social and economic lives of everyone else.
In other words, they believe that the best way to reverse income inequality is for more princes to marry Cinderella — which is a lot easier than focusing on all the other issues.